Top Positions in Paid Search may not be the most Profitable

Everyone understands that in organic search the higher you rank for a keyword, the better it is for your company. This isn’t always the case with paid search as many people assume. A new research paper reveals top positions in search query results are not always the most profitable ones for pay per click.

The study found that the most prominent positions on the search engine results page are not always the most profitable ones, despite having higher click-through rates, due to aggressive bidding that increases the cost of advertising. Also, the study found that retailer-specific keywords are associated with an increase in click-through and conversion rates, while brand-specific keywords are associated with a decrease.

Download the study – “An Empirical Analysis of Search Engine Advertising: Sponsored Search in Electronic Markets” by New York University professors Anindya Ghose and Sha Yang.

For the most part, we try to have our clients rank in the 4-5 position for competitive keywords since most of working with limited budgets. We chose this method based on common sense. If our clients could only spend $50 a month on a keyword, but there was enough traffic out there to spend $100, why pay more for the top position? Since our clients were having success with this strategy, we’ve continued to use it. However since we’ve never tested this against paying top dollar for the competitive, it’s nice to see a study that proves our method is sound.